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Posts Tagged ‘predominance’

The Supreme Court has issued its opinion in one of the most highly anticipated class action-related cases on the docket this term.  The result in Amgen Inc. v. Connecticut Retirement Plans and Trust Funds, No. 11-1085, slip op. (U.S., Feb. 27, 2013) is not surprising given the content and tone of the questioning at oral argument.  In an 6-3 opinion authored by Justice Ginsberg, the Court held that the plaintiff in a securities fraud case based on a fraud-on-the-market theory of reliance does not have to prove materiality of the fraudulent statement or omission at the class certification stage.  Because materiality is a common question capable of resolution simultaneously for the entire class, the majority reasoned, it does not have to be proven at the class certification stage.  Justices Scalia, Thomas, and Kennedy dissented.

Amgen is an important decision in the securities fraud context because it addresses the lingering question of whether any special prerequisites exist in certifying a securities fraud class action that aren’t required in certifying other types of class actions.  Like the Supreme Court’s earlier decision in Erica P. John Fund v. Halliburton Co., 131 S. Ct. 2179 (2011), Amgen will probably have an impact beyond the securities fraud context.  In the context of class certification decisions more broadly, the opinion will be almost certainly be cited as clarifying the distinction between issues impacting the elements of class certification, which must be resolved at the class certification phase, and merits issues, which can wait until trial to be resolved.

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The Ninth Circuit Court of Appeals issued a ruling yesterday that will be a blow to plaintiffs seeking to sue call centers in class actions for violations of California’s Invasion of Privacy Law, Cal. Penal Code § 632 (sometimes called the “wiretapping” statute).  The law prohibits the recording or monitoring of confidential telephone calls without the caller’s consent.  It is an appealing basis for class action claims because it provides for statutory penalty of $5,000 per violation, creating the possibility of annihilating exposure in a case that involves a call center that handles thousands of customer calls.

In Faulkner v. ADT Security Services, Inc., the court affirmed the trial court’s dismissal of a claim under the statute based on allegations that a call center for a security company recorded the call of a customer who called with a billing dispute.  The Ninth Circuit fell short of holding that a billing dispute with a security company could never qualify as a “confidential” communication giving rise to liability under the law, but it did observe that whether a particular call was confidential would require unique facts:

For example, a caller might be asked to verify his identity by confirming his social security number or his unlisted telephone number, or to disclose other private or potentially private information. If adequately pled, such facts might well support a finding of confidentiality.

Slip op. at 9, n.***.  The need to examine the particular content of each call to determine whether liability is present would in most cases create an individualized issue of fact preventing class certification.  So, although the ruling does not close the door on claims against call centers for violations of the Invasion of Privacy law, it presents a hurdle to the certification of potentially bankrupting class actions.

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This is the second of what will be six posts summarizing my notes of the six presentations at the ABA’s 16th Annual Class Actions Institute held last month in Chicago.  For more on this excellent conference, see this October 31, 2012 CAB Post.

Session 2 addressed a topic of great relevance to all class action practitioners, regardless of the subject matter area of practice.  It was entitled “The Class Definition That Works . . . or Does It?” Strategies for Pleading and Attacking Class Definitions;  The Most Basic and Most Ignored Step in a Class-Action Lawsuits Success or Failure.  The panel of academics, judges and practitioners discussed recent developments in the state and federal courts regarding the requirements for a class definition.  They also discussed practical tips for plaintiffs in articulating a class definition that will withstand attack at the class certification stage, and practical tips for defendants in defeating class certification by attacking the plaintiff’s choice of class definition.  Program Chair Daniel R. Karon moderated the panel discussion, which consisted of The Honorable James G. Carr, Bart D. Cohen, Donald Frederico, Professor Dean Robert Klonoff, Sabrina H. Strong, and Ranae D. Steiner. 

Here are some highlights of the pointers made by the panel during the presentation:

  • Many courts have accepted several additional elements as implicit under Rule 23 and similar state rules of civil procedure, including that the class definition be sufficiently clear and narrow so that the class is ascertainable and not overly broad.  These requirements are implied in order to ensure 1) that the class can be identified from a practical perspective; 2) that the defendant has notice of the claims being made against it and by whom those claims are being made; and 3) that the court can manage the litigation.
  • These issues can also be expressed through the other, express Rule 23 elements.  For example, if a class is not ascertainable, then there is no basis to conclude that numerosity is present.  Similarly, an inability to distinguish class members who have a claim from those who do not should lead the court to conclude that common issues do not predominate.
  • Many trial judges would prefer to consider issues relating to the class definition in terms of the express Rule 23 elements rather than by accepting addition, implicit requirements.
  • Rather than declining to certify altogether, courts are often willing to work with plaintiffs’ counsel to try to come up with alternative class definitions that resolve problems associated with a class as originally proposed.
  • Because most judges are not dealing with these types of issues on a daily basis, the involvement of counsel on both sides is essential to the judge’s well-reasoned evaluation of the potential legal and practical problems with the proposed class definition and whether those problems can be remedied without violating the rights of the defendant or absent class members or overburdening the court.

The panel grouped issues relating to class definitions into various categories.  The panel discussed each of these categories in reference to an example case.  In many instances, the categories overlap, and the example cases often illustrated more than one of the categories.  I have listed below, for each category, the key problems, the example case(s) discussed by the panel, and my notes on insights offered by panelists:

Lack of objective criteria for class membership

Issue – Membership in the class depends on criteria that cannot be established without looking at each class member individually.

Example –  Solo v. Bausch & Lomb Inc., MDL No. 1785, 2009 WL 4287706 (D.S.C. Sept. 25, 2009):  In class action seeking compensation for the lost value of tainted contact lens solution that purchasers were encouraged to dump out as part of a product recall, class defined as consisting of all purchasers who “lack[ed] full reimbursement” for the value of the solution purchased.

Notes – fixes proposed by panel members included 1) Expand definition to remove individualized issues, e.g. “all who purchased”, but this could create overbreadth problems; 2) create subclasses based on date of purchase, and estimate likely amount of consumption for members in each subclass.

Vagueness

Issue – The class definition is too vague and indefinite to determine who is in the class.

Example – Heisler v. Maxtor Corp., No. 5:06-cv-06634, 2010 U.S. Dist. LEXIS 125745 (N.D. Cal. Nov. 17, 2010): Class defined as anyone who experienced a hard drive “failure.”  The problem was determining what constituted a “failure” and limiting that phrase to failures caused by the alleged product defect. 

Notes – The Maxtor case provides an example of a decision where the court preferred to characterize the issues in relation to the express Rule 23 requirements.  The case also illustrates a common problem in cases where causation may be an issue.  By trying to limit class membership to only those individuals who suffered harm, the plaintiffs created a vagueness problem.

Failsafe Class

Issue – Class definition includes only those individuals who will ultimately prove their claims on the merits, so that class membership is not determined until a decision on the merits occurs.  The main problem with failsafe class is that it puts the defendant in a lose-lose situation.  Either the class wins at trial, binding the defendant to a classwide judgment, or the defendant prevails but gets no preclusive effect against absent class members.

ExampleNudell v. Burlington N. & Santa Fe Ry. Co., 2002 WL 1543725 (D.N.D. 2002): The court denied certification after determining that class membership hinged on class members’ ability to prove all of the factual issues that would prove their claims on the merits, including that they owned land abutting a railroad easement, that they did not give consent to the placement of utility cables on the easement, and so on. 

Notes – The problem in Nudell may have been due to a failure to develop the record sufficiently to convince the court that class membership could be determined based on objective criteria.  This is an example of a case where problems with the class definition could be remedied.  The case ultimately settled on a classwide basis after the class was re-defined.

Overbreadth

Problem – Class includes members who did not suffer injury or who have no legal right to recover.

ExamplesSanders v. Apple Inc., 672 F. Supp. 2d 978 (N.D. Cal. 2009): In action for deceptive advertising, class definition included all persons who “own” a 20-inch iMac.  The court found this definition overly broad because it included individuals who didn’t purchase the product and those who weren’t deceived by the advertising.  Anderson v. United Fin. Sys. Corp., 281 F.R.D. 292 (N.D. Ohio 2012): Class was found to be overly broad because it included class members whose claims were time-barred and who had no private right of action.

Notes – In some cases, overbreadth can be cured simply by narrowing the class definition.  On others, however, overbreadth is a symptom of predominance issues that may be difficult to remedy.

Class Definitions in Class Action Settlements

The panel also discussed issues in class definition within the settlement context.  As is true with other threshold requirements, the courts are generally more lenient about class definitions in the settlement context than they are in the litigation context, in large part because manageability concerns are lessened when otherwise contested issues do not have to be resolved.  An example is the DeBeers diamond settlement, Sullivan v. D.B. Invs., Inc., 667 F.3d 273 (3d Cir. 2011), where the Third Circuit affirmed certification of a settlement class over objections claiming that some of the class members would not have had a private right of action due to variations in state law.  Whether the inclusion of class members whose claims are barred or significantly weaker than other class members should be a bar to certification of a settlement class probably depends on whether other class members will suffer as a result.  If it’s simply a matter of the defendant agreeing to waive defenses as to a portion of the class, then courts are more likely to overlook variations in the strengths and weaknesses of individual class members’ claims.

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This is the first in what will be six posts summarizing my notes of the six presentations at the ABA’s 16th Annual Class Actions Institute held last Thursday in Chicago.  The National Institute sets the gold standard for class action conferences, and this year was no exception.  Program Chair Daniel Karon and the rest of the organizing committee did an excellent job selecting six of the most timely and relevant topics facing class action practitioners today.  As always, the list of panelists was a veritable who’s who in the class action field.  If you ever have the opportunity to attend this annual conference, I highly recommend it.

As has become the custom at the National Institute, Columbia Law Professor John C. Coffee, Jr. kicked off this year’s program with a comprehensive and insightful summary of the year’s key developments in class action law.  This year’s presentation saw what has been a hit solo act turn into an even better duet, as Professor Coffee shared the stage with Connecticut Law Professor Alexandra Lahav.  The session was titled “Holy Cow!  This Year the Courts Said What?!” A Brief History of this Year’s Developments in Class Action Jurisprudence.  Attendees were also treated to a comprehensive, 179-page summary of the year in class actions by Professors Coffee and Lahav entitled The New Class Action Landscape: Trends and Developments in Class Certification and Related Topics.

The first part of Professor Coffee’s presentation covered each of the class action-related cases on the U.S. Supreme Court’s docket this term.  Here is a list of those cases with some of Professor Coffee’s insights:

  • Connecticut Retirement Plans & Trust Funds v. Amgen, Inc., 660 F.3d 1170 (9th Cir. 2011) – Amgen raises the question whether the plaintiff must establish the materiality of an alleged false statement at the class certification stage of a securities fraud class action.  Professor Coffee believes that this case is a close call, but whichever way it comes out, it does not threaten to end securities class action litigation as we know it.
  • Behrend v. Comcast Corporation, 655 F.3d 182 (3d Cir. 2011) – In Behrend, the Court could decide whether a trial court must perform a full Daubert analysis of expert testimony offered in support of or in opposition to class certification.  The case raises the question, at least in the antitrust context, whether the plaintiff must present a  formal damages model or whether the mere possibility of common proof is enough.
  • Symczyk v. Genesis Healthcare Corp., 656 F.3d 189 (3d Cir. 2011) – This is a wage and hour case under the FLSA, which has a different procedure than Rule 23.  FLSA claims are more accurately characterized as collective actions, rather than class action.  The issue is whether a settlement offer for the full amount of the named plaintiff’s FLSA claim can moot the claim and prevent the case from proceeding on a collective basis, a concept also known as “picking off.”   One of the arguments that has been raised is that the writ of certiorari should be dismissed as improvident granted, so it is unclear whether the Court will actually enter a substantive ruling.
  • Knowles v. The Standard Fire Insurance Company, 2011 U.S. Dist. LEXIS 130077 (W.D. Ark. December 2, 2011) – This case raises the question whether a plaintiff can plead around CAFA removal jurisdiction by stipulating to less than $5 million in damages on behalf of the putative class.  Professor Coffee felt confident in making the prediction that the defendant will win.  He points to dicta in the Court’s recent decision in Smith v. Bayer Corporation calling into question whether a plaintiff can do anything to bind the members of a putative class before it is certified.

Professor Coffee then went on to highlight some of the big developments in the lower courts from over the past year, which include:

The proper burden of proof to be applied at class certification.  The circuits are split on this issue, with some applying a preponderance of the evidence standard and others simply requiring a rigorous analysis with no particular evidentiary standard.

Treatment of expert testimony.  The federal district courts continue to resist resolving a battle of the experts at the class certification stage, but dicta from the Supreme Court in Dukes, as well as holdings by several of the circuits, are putting increasing pressure on the federal courts to perform a Daubert analysis (and the Court could resolve this issue for good in Behrend).

Class Arbitration Waivers.  Some lower courts, especially the Second Circuit, continue to carve out exceptions to the Supreme Court’s ruling favoring arbitration agreements in Concepcion.   One key issue is whether a class arbitration waiver may still be held unconscionable as a matter of federal law.  Professor Coffee quipped that the Second Circuit will only change if the Supreme Court “stuffs it down their throat.”  While unconscionability under state law is no longer a viable argument against enforcing an arbitration clause, clauses with fee-shifting provisions continue to be susceptible to attack.

Settlement Only and Limited Fund Classes.  There is a lower court trend in permitting certification in settlement classes in cases that could not be certified as class actions in contested cases, notwithstanding the Supreme Court’s opinion in Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 617 (1997).  The primary justification tends to be that any individualized issues of fact in the case went to manageability, which is no longer an issue in the settlement context.   In cases where courts have found that individualized issues impact both predominance and manageability, settlement classes have continued to be rejected.

Partial Certification.   The question of issue certification has been one of the hottest trends in the federal courts in the wake of Dukes.  Professor Coffee pointed out that the resolution of whether courts allow partial certification tends to be determined whether the fact of certification creates an extortionate threat to settle the case.

Class Action Settlements.  If you read just one class certification decision this year, Professor Coffee recommends Judge Rosenthal’s memorandum opinion in In re: Heartland Payment Systems, Inc. Customer Data Security Breach Litigation, MDL No. 09-2046 (S.D. Tex. March 20, 2012), which has a well-organized, step-by-step analysis of the approval of a class action settlement.

Professor Lahav focused her remarks on what has been happening in the lower courts in response to the three key aspects of the Court’s decision in Dukes: 1) the “new commonality” requirement; 2) the rejection of the use of Rule 23(b)(2) to recover individualized money damages; and 3) the rejection of “trial by formula,” of the use of statistical sampling to solve individualized damages problems.

The “new commonality”.  Among Professor Lahav’s key observations was that in the Title VII context, there must be a policy, but if there is an identifiable policy, the courts will allow discretionary elements of that policy to be attacked.  This trend is best exemplified by Judge Posner’s decision in McReynolds v. Merrill Lynch, Pierce, Fenner & Smith, Inc.  As many commentators predicted, Plaintiffs have had better success after Dukes by narrowing the geographic scope of discrimination claims.  This has also been true in the consumer context.  In the civil rights context, allegations of systemic constitutional violations have had success when the courts have focused on the systemic nature of the practice, but not when courts have focused on the effects of a systemic practice on the prospective class members.  In general, there has been an increasing reliance on issues classes to overcome individualized issues that might destroy commonality or predominance.

Rule 23(b)(2) and monetary damages.  The majority opinion in Dukes raised the question whether there can ever be a class with monetary damages.  None of the circuit courts have provided further guidance on when damages might be sufficiently “incidental” to still allow relief.  One area that has seen mixed results since Dukes is the area of medical monitoring class actions, where the remedy sought is medical monitoring of the possible health effects of a toxic exposure but the cost of monitoring can vary from person to person.  Professor Lahav pointed to the Third Circuit’s decision in Gates v. Rohm & Haas Co., No. 10-2108 (3d Cir., Aug. 25, 2011), as potentially supporting arguments on both sides.  Hybrid class actions, where classes are certified based on both Rule 23(b)(2) and 23(b)(3), are becoming increasingly common, especially in the Title VII context.  One unanswered question is whether damages claims are precluded if a Rule 23(b)(2) class is certified but not successful.

Statistical evidence and “trial by formula.”   Statistical evidence is still accepted in contexts where it has been accepted traditionally, e.g. civil rights, disparate impact, and antitrust cases.  It is not allowed in cases where the defendant can raise individualized defenses.  One proposed solution is, again, issues classes, but this creates a class action funding problem – How do lawyers get paid?

Professor Lahav also revisited statistical trends in class actions, focusing primarily on data compiled by the Federal Judicial Center in 2008 which analyzed the impact of the Class Action Fairness Act (“CAFA”).  She made the key point that statistical data on class action trends has been severely lacking since the FJC study, making updated empirical analysis of class action trends difficult.

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Tiger Joyce, President of the American Tort Reform Association, authored an impassioned op-ed for the Washington Times yesterday entitled A Class-action Blow to U.S. Manufacturing.  Joyce argues that the entire manufacturing industry is at risk if the United States Supreme Court declines to grant certiorari of the Sixth Circuit’s decision in the case of Whirlpool v. Glazer, No. 12-322, in which the court upheld class certification of claims that washing machines were defectively designed, causing chronic mold problems.  Whether Joyce’s warning is hyperbole or prescience remains to be seen, but the case does raise some interesting issues of note to class action practitioners.  The issues presented for review are as follows:

1. Whether a class may be certified under Rule 23(b)(3) even though most class members have not been harmed and could not sue on their own behalf.

2. Whether a class may be certified without resolving factual disputes that bear directly on the requirements of Rule 23.

3. Whether a class may be certified without determining whether factual dissimilarities among putative class members give rise to individualized issues that predominate over any common issues.

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The United States Supreme Court has granted certiorari in another class action to be heard during the October 2012 term.  In Comcast Corp. v. Behrend, No. 11-864, an antitrust class action, the Court will address the following issue:

Whether a district court may certify a class action without resolving whether the plaintiff class has introduced admissible evidence, including expert testimony, to show that the case is susceptible to awarding damages on a class-wide basis.

The case is an appeal from the Third Circuit Court of Appeals’ ruling in 2011 upholding the district court’s finding that the plaintiff had presented by a preponderance of the evidence that damages could be proved on a common, class-wide basis.  However, a lengthy opinion from Judge Jordan, concurring in part and dissenting in part, took issue with the conclusions reached by the plaintiffs’ expert that antitrust damages could be established on a common basis for the class as a whole. 

As with many of the cases addressed by the Supreme Court over the past few years, this case provides an opportunity for the court to either enter a specific ruling narrowly tailored to the area of law in which it applies (here, antitrust or competition law) or a sweeping ruling impacting the procedure governing class certification more generally.  In particular, the Behrend case could potentially resolve the issue whether difficulties in proving damages on a class-wide basis is a reason to deny certification.  For many years, lower courts have relied on the rule that individualized damages issues are not a barrier to class certification.   A reversal of that rule could have a major impact on the viability of class actions in a variety of contexts.

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Editor’s Note: This is a joint post for ClassActionBlawg and the newly-launched Baker Hostetler Class Action Lawsuit Defense Blog.  Be sure to bookmark the Baker Hostetler blog at www.classactionlawsuitdefense.com for the latest in class action trends and decisions.

A common temptation in class action litigation is to fashion procedures based on “rough justice” to avoid overburdening the courts or attempting to redress alleged mass harm.  Over the past decade, as storage and computing power have increased exponentially, it has become increasingly tempting to use statistical sampling as a proxy for the actual adjudication of facts in class or mass actions.  The idea is that if the facts regarding a statistically significant subset of a class can be evaluated for a particular issue or set of issues, then the results of the evaluation of the sample can be extrapolated across the rest of the class.

One jurisdiction in particular where this approach has gained traction has been California.  There, the use of statistical sampling has been recognized for several years as a means of apportioning damages in some cases.   See Bell v. Farmers Ins. Exchange (2004) 115 Cal.App.4th 715 [9 Cal.Rptr.3d 544] (Bell III).   However, in recent years, plaintiffs have attempted to use statistical sampling as proof of liability, not simply as a means of apportioning damages when liability has been established or (as in Bell III) it is not contested.  This approach was harshly criticized in Part III of Justice Scalia’s majority opinion in Wal-Mart v. Dukes, (notably, this was the portion of the Dukes opinion with which all nine justices concurred):

The Court of Appeals believed that it was possible to replace such proceedings with Trial by Formula. A sample set of the class members would be selected, as to whom liability for sex discrimination and the backpay owing as a result would be determined in depositions supervised by a master. The percentage of claims determined to be valid would then be applied to the entire remaining class, and the number of (presumptively) valid claims thus derived would be multiplied by the average backpay award in the sample set to arrive at the entire class recovery— without further individualized proceedings. [internal citation omitted].  We disapprove that novel project.

Earlier this year, in Duran v. U.S. Bank National Association, No. A125557 & A126827 (Cal. App., Feb.  6, 2012), a division of the California Court of Appeal agreed with the above-quoted dicta in Dukes and rejected an attempt to use statistical sampling to prove liability an a wage and hour class action.  The plaintiff had presented testimony from statistician Richard Drogin, who had also served as an expert for the plaintiffs in Dukes.  Drogin presented a random sampling analysis that purported to estimate the percentage of the defendant’s employees that had been misclassified for purposes of entitlement to overtime pay.  The trial court adopted a sampling approach that was modeled on (but not exactly the same as) Drogin’s proposal.  

The Court of Appeal held that the trial court’s approach was improper and that it violated defendant’s due process rights for a variety of reasons, including that 1) the use of statistics to estimate the total number of employees who had been misclassified deprived the defendant an opportunity to present relevant evidence and individualized defenses as to individual plaintiffs’ alleged misclassification; 2) the court’s statistical methodology was flawed because it arbitrarily used a sample of 20 employees without any basis for concluding that the sample was statistically significant; 3) even the use of sampling as to damages was improper because the methodology used had an unacceptably high margin of error.

The Duran opinion is worthy of careful study for anyone considering the use of statistics in class certification proceedings, both in the employment context and in other types of class actions.  The opinion examines many of the due process problems with allowing proof of liability through statistical sampling, the most significant of which is that it tends to deprive a defendant of presenting evidence in its defense that it would be able to present in an individual case.  It also provides an additional illustration of what the Supreme Court considered an improper “trial by formula” in Dukes.

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One of the hottest substantive areas in consumer class actions these days is litigation under the Telephone Consumer Protection Act (TCPA), 47 U.S .C. § 227, sometimes called the “fax blast” statute, which prohibits unsolicited faxes and automated calls for the purpose of commercial solicitation.  The TCPA has a statutory penalty provision that allows consumers to recover $500 for each violation.  The ability to collect far more in statutory penalties than the actual damages caused by a given violation makes TCPA violations an appealing target for enterprising plaintiffs’ class action lawyers.  The aggregation of thousands of claims together can create huge monetary exposure for defendants and the potential for easy settlements and the large contingent fees that comes with it.  In this way, the TCPA is similar to other laws with statutory penalties, such as the Fair and Accurate Credit Transactions Act of 2003 (FACTA), which provides for statutory penalties against a company that produces credit card receipts with too much information on them.

Although it is a federal statute, the TCPA does not provide for federal court jurisdiction in private actions to enforce it.  TCPA class actions may only be filed in or removed to the federal courts if there is diversity jurisdiction under CAFA

This has naturally given rise to the question of whether state laws limiting class actions, such as § 901(b) of New York’s Civil Practice Law and Rules, which prohibits class actions for claims seeking statutory penalties, are applicable in federal court exercising diversity jurisdiction over TCPA claims.   Before the Supreme Court’s decision in Shady Grove Orthopedic Associates, P.A. v. Allstate Insurance Co., the Second Circuit Court of Appeals said yes.  After the Supreme Court remanded for reconsideration in light of Shady Grove, the Second Circuit said yes again, reasoning that the TCPA’s language allowing private enforcement “if otherwise permitted by the laws or rules of court of a State” gave the states broad power to determine how TCPA actions may be prosecuted within their borders.  The Third Circuit has disagreed with this conclusion, holding that State limitations on class actions do not apply in TCPA class actions filed in the federal courts.  Given the Third Circuit’s view, defendants in at least some jurisdictions may have a strong incentive to oppose federal jurisdiction in TCPA cases.

Another question that arises from the peculiar federalist nature of the TCPA is whether a state or federal statute of limitations applies.  Earlier this week, in Giovanniello v. ALM Media LLC, the Second Circuit answered this question and held that a shorter state law limitations period applied rather than the 4-year federal catchall provision. 

Several recent decisions have highlighted a split among both the state and federal the courts about whether TCPA claims should be permitted to be brought as class actions at all.  Of particular note is the recent decision of the New Jersey Superior Court, Appellate Division in Local Baking Products, Inc. v. Kosher Bagel Munch, Inc., which provides an excellent survey of the various state and federal court decisions on both sides of the issue.  The court in Local Baking Products ultimately decided that class certification of TCPA claims was not appropriate. It reasoned that class actions are not a superior procedure for enforcing the TCPA because Congress had made statutory penalties available so that individuals would be incentivized to pursue vindication of their rights in individual actions in small claims or other state courts.  In addition to lack of superiority, a common reason offered by other courts for rejecting class certification is that the question of whether faxes or calls were authorized is too individualized for common questions to predominate.

Earlier this month, however, the Supreme Court of Kansas upheld a lower court’s decision granting class certification in a TCPA case.  In Critchfield Physical Therapy v. The Taranto Group, Inc., the court rejected both the argument that individual actions in small claims court would be superior to a class action and the argument that the question of consent was too individualized.  In addition, the court rejected the argument that class actions would not be superior in light of the threat that aggregating thousands of individual statutory penalties together could create an “annihilating” judgment against the defendant that would be disproportionate to any harm to the class.  A similar argument had been successful in a FACTA case in California federal court, but later reversed by the Ninth Circuit in Bateman v. American Multi Cinema, Inc.

Meanwhile, while a bill has been introduced in the U.S. house to “modernize” the TCPA by permitting certain informational robo-calls to be made to mobile phones, among other things, the bill would not modify the private enforcement provisions of the statute.

One quandary facing courts and counsel in TCPA class actions is how to give notice to consumers if a class is certified.  Last month, a Madison County, Illinois judge ordered that notice of a class action for unsolicited faxes under the TCPA should be disseminated by. . . 

. . . you guessed it . . .  

fax.

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The Wal-Mart v. Dukes argument was held as scheduled today.  Here is a Wal-Mart v. Dukes Oral Argument Transcript.  Some initial observations:

  • The beginning of the defendant’s argument was focused on the proper standard for reviewing whether the plaintiff had sufficiently common evidence of a uniform policy.
  • It was not until later in the defendant’s argument that the questioning turned to the question certified for review: whether a Rule 23(b)(2) class action should be certified in a class action seeking monetary relief in the form of back pay.  Questioning on this issue continued into the plaintiff’s argument, but then returned to questions of what standard should apply more generally in certifying an employment discrimination class action.
  • On balance, the tougher questioning of the defendant’s attorney was from the more liberal faction of the court, and the tougher question of the plaintiff’s attorney was from the more conservative faction of the court. 
  • However, to the extent the questions can be a sign of a potential split in the Court (always a dangerous assumption), it is interesting that Justice Ginsburg seemed particularly troubled by the plaintiff’s position on the applicability of Rule 23(b)(2) to the back pay claims.
  • Overall, the sentiment seemed to be against allowing Rule 23(b)(2) to be used as a vehicle to resolve individual back pay claims (again, recognizing that the nature and tone of oral argument questions is not a very reliable way to predict outcomes).  However, there seemed to be some support among several Justices for the possibility that a case could be certified under Rule 23(b)(2) for injunctive relief only, on the ground that hiring policies are discriminatory because they are excessively subjective.

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Yesterday, the California Court of Appeal issued an important class certification opinion in a wage and hour case, Brinker Restaurant Corp. v. Superior Court (2008 WL 2806613).  This decision was highlighted in an entry yesterday on The Complex Litigator (see yesterday’s CABWR).

The Baker Hostetler Employment and Labor Practice Team has issued an Executive Alert summarizing the decision and its possible implications for employers.  Here is an excerpt:

Employers should pay particular attention to their existing company policy on meal and rest periods and whether there is a policy discouraging off-the-clock work and time-shaving procedures. Employers also should be aware that this decision may be appealed to the California Supreme Court.

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